This headline in the New York Times this morning: ‘Health Plan Cost for New Yorkers Set to Fall 50%’ sounded like good news for the Obama administration. But it may not be as good as federal officials are trying to make it.
As a health care reporter, you know something’s up when a breathless email from the U.S. Department of Health and Human Services arrives in your inbox. “Wanted to make sure that you had seen the news that premiums in New York’s individual market are set to fall under the Affordable Care Act,” wrote spokeswoman Joanne Peters.
And it’s true -- New York state regulators say people who today pay $1,000 a month will be able to buy plans for as little as $308 a month under the Affordable Care Act. Not to spoil the Obamacare party, but University of Pennsylvania Professor Tom Baker says the plummeting prices are more about the state’s insurance market than the new law. “Among large states, New York might be the most messed up insurance market there is,” he says.
Right now, New York has some of the highest prices because insurers must charge the young and the old, the healthy and the sick the same rate. But under the new law -- which requires everyone to have insurance and subsidizes the plans -- an additional 600,000 people are expected to buy coverage.
And Elisabeth Benjamin at the Community Service Society of New York says insurers want a piece of the action. “So all these carriers are seeing this as a great business opportunity because there are more covered lives,” she says.
But in reality, New York is an outlier. Linda Blumberg at the Urban Institute says what the state really has going for it is this competitive marketplace. “In markets that already have competition, we are seeing some good rates," she says. "In states where you don’t have that kind of competiton, it’s going to be tough to get lower rates than what they experience today.”
Blumberg says whether exchanges are run by the state or by Washington others shouldn’t expect to see a New York sized cut to their rates any time soon.